Butterfly Equity buys Qdoba and integrates it into Modern Restaurant Concepts

Diving brief:

  • Butterfly Equity will acquire Qdoba from Apollo Global Management for an undisclosed amount, Butterfly announced on Tuesday. Butterfly will merge Qdoba with Modern Restaurant Concepts. The transaction is expected to close during the third quarter.
  • Modern Restaurant Concepts, which consists of fast-casual brands Lemonade and Modern Market Eatery, will reach around 800 units following the deal. Qdoba’s approximately 750 units will account for the vast majority of the company’s unit count.
  • Apollo Global Management is rumored to be considering selling Qdoba in 2019, less than two years after acquiring the Mexican fast casual chain from Jack in the Box. The acquisition of Butterfly suggests that some companies are still willing to acquire new brands to grow their platforms, despite market uncertainty.

Overview of the dive:

Qdoba’s franchise model could help bolster MRC’s expansion goals. Modern Market recently signed a multi-unit franchise agreement, the first for the brand, adding 40 units in seven states, according to the press release. Qdoba has extensive franchising experience – 450 of its approximately 750 locations are franchised, and it has approximately 300 franchised restaurants in its development pipeline to open over the next five years. MRC management estimates that the three brands have the potential for more than 3,000 units combined.

“QDOBA is an iconic brand whose reach will help us bring Modern Market and Lemonade to new consumers and franchisees across the country, especially as we begin our own franchising journey,” said Rob McColgan, CEO of MRC. .

In addition to its franchise experience, Qdoba has built its digital heritage This year. In February, the chain revamped its loyalty program into a two-tiered offering, in which customers who visit the chain more than 12 times in a year gain access to more extensive loyalty benefits. In June, Qdoba launched a queso-focused virtual brand, Pure Gold by Qdoba, which is available through third-party apps in a small number of markets.

Despite falling real gross domestic product, high inflation and sluggish personal consumption — which have raised fears of a recession in recent months — restaurant acquisitions have continued. In July, Ampex Brands, the parent company of Au Bon Pain, acquired Bellagreen. During the same month, Denny’s also completed the acquisition of Keke’s Breakfast Cafe for $82.5 million and Gala Capital Partners purchased Dunn Brothers Coffee.

This wave of acquisitions shows that companies are looking to create platforms composed of several complementary brands. Fat Brands, for example, acquired eight brands in 2021 and is now looking to increase its system-wide unit count by 900 units over the next five years.

About Imogene T. Bishop

Check Also

How consistent communication can help revive the hospitality industry | modern restaurant management

In the wake of the pandemic-induced economic turmoil, the hospitality industry is suffering from labor …